Cabinet

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Cabinet

  1. 1. Cabinet 20 June 2001 Asset Management Strategy Development Report by: Capital Advisory Group Ward Implications: All For Decision 1. Synopsis This report sets out the current position of the Council in the asset management process and recommends action required to both support the development of that process and to comply with the Government’s requirement to publish a Capital Strategy and Asset Management Plan by 31 July 2001. 2. Recommendations Cabinet is recommended to: 1. Note the developments set out in the report; 2. Endorse the roles and responsibilities as defined in section 4 of the report; 3. Authorise the Head of Property Services to develop a strategy and timetable to address the key issues set out in section 6 of the report; 4. Approve the provision of funding for the ongoing work of asset management planning, as set out in section 7 of the report; and 5. Authorise the Director of Enterprise, Environment and Culture, the Director of Strategic Support and the Director of Cityworks to develop a formal Capital Strategy and Asset Management Plan for the Council by drawing together and building on the current processes. The draft Capital Strategy and Asset Management Plan to be presented to the next meeting of Cabinet. 1
  2. 2. 3. Introduction and Context 3.1 There are a number of ongoing initiatives that are raising the profile of the strategic management of property assets in local government: • Central government's proposals for a single capital pot, distributed on the basis of need and performance - guidelines issued by DETR require the production of a capital strategy (CS) and asset management plan (AMP). • DfEE requirements for a schools capital strategy and asset management plan for the schools estate. • DETR requirements for the establishment of a new financial framework for local authority housing from April 2001. • Publication of the Audit Commission's report entitled "Hot Property: Getting the Best from Local Authority Assets" - recommends that authorities challenge the need to retain property, search for innovative ways of providing services, and ensure that strategic property matters receive regular scrutiny from the management board and elected Members. • The best value requirements of Part I of the Local Government Act 1999 - require that a rigorous approach is adopted towards asset management in terms of stakeholder involvement; demonstrating economy, efficiency and effectiveness; examination of objectives and delivery mechanisms; and measurement of performance. 3.2 Capital Strategy The Council is required to publish a Capital Strategy by July 2001, a “dry run” document having been produced in July 2000. The Capital Strategy will represent a high level summary of the Council’s approach to capital investment, highlighting key priorities and targets, explaining the approach to prioritising investment, and explaining how the Council will monitor and evaluate progress. Asset Management Plan The Asset Management Plan itself, also required by July 2001 with a “dry run” version produced in November 2000, will set out a strategic and managed approach to the development and enhancement of the performance of property assets to improve service delivery. The Plan will provide information on the following areas: 1. corporate action and the role of the Corporate Property Officer; 2. processes for consultation; 3. data management; 4. system for performance monitoring and measurement; 5. programme development (processes being/to be adopted); 6. treatment of under-used and surplus assets; and 2
  3. 3. 7. spending and outputs (capital programme, resources, capital receipts projections, etc.). 3.3 Government Office for the North East has assessed the “dry-run” documents submitted last year, and provided the following overall feedback: Capital Strategy “A clear understanding has been demonstrated on most of the issues that the Capital Strategy involves and the systems that are required. There is clearly some way to go in achieving the Council’s objectives but this is a good start. The major noticeable weakness to be addressed is the apparent lack of community/stakeholder involvement in determining priorities.” Asset Management Plan “The City Council has a vast array of fixed assets, as identified in the AMP. Developing robust asset management systems and procedures will be essential if they are to be managed corporately. The Council shows a good understanding of what needs to be done. An asset management development plan has been agreed and a timetable is in place to address some aspects of the asset management process during 2001. We look forward to seeing how these have been incorporated into the Council’s AMP and Capital Strategy in July 2001.” The feedback will provide a baseline for future assessment and enable the Council to make appropriate improvements in the strategy documents to be submitted in July 2001. 4. Roles and Responsibilities 4.1 The DETR guidance recommends that the Council has in place a designated individual and team with authority to develop the corporate asset management process. 4.2 Corporate Property Officer In response to DETR and Audit Commission recommendations, Corporate Team has nominated the Head of Property Services as Corporate Property Officer (CPO), although a precise role has not been defined. For purposes of clarification, it is suggested that the CPO, reporting to the Capital Advisory Group, should be given specific responsibility for the following: • writing and facilitating the implementation of the Asset Management Plan; • identifying the property requirements of service departments in line with corporate requirements, following consultation with Directorates; • developing a corporate database system for all land and property 3
  4. 4. assets; • developing and implementing a performance management system for property assets; • overseeing a programme of condition surveys of Council properties; and • providing expertise and advice on asset management issues. 4.3 Capital Advisory Group The role and representation of the Capital Advisory Group are being reviewed. The intention is to re-establish a strategic forum to guide the Council’s approach towards capital investment strategy and asset management in the widest terms. With an appropriate cross-Directorate membership of senior officers, the group will oversee the development and implementation of the Capital and Asset Management strategies, and will provide a means to ensure that all issues relating to capital investment and asset management are debated and managed in one forum. In relation to property asset management, the Group is to be given specific responsibility for the following: • establishing and assessing the detailed work programme for the Asset Management Plan and Capital Strategy (including the property review programme, acquisition and disposal programmes, opportunities for cross-service working, condition surveys, etc.); • developing and monitoring the capital programme as a whole, including making recommendations for the prioritisation of schemes, determining the use of available resources and effective project appraisal; • agreeing the objectives for the commercial property portfolio, setting criteria for the performance of existing assets and assessing potential for acquisitions/investment; and • considering strategic issues in connection with capital procurement (e.g. partnership working, PFI, best value). 4.4 Asset Management Working Group The role and representation of the existing Asset Management Team are being reviewed. The intention is to establish a forum where representatives from service departments co-ordinate the delivery of the detailed work programme as established by CAG. Membership of the Group will include: • technical support staff covering property and financial disciplines (Property Services, Strategic Support and City Design); • service property managers (e.g. Social Services, Education); and • representatives covering corporate initiatives (e.g. Going for Growth, 4
  5. 5. Customer Service Development Team, Policy Unit) The Working Group, reporting to Capital Advisory Group, is to be given specific responsibility for the following: • ensuring that service plans identify how short, medium and long term requirements will impact on the property portfolio (including changes in government legislation/regulations, budgetary constraints, etc.); • co-ordinating the property review programme, including condition surveys and suitability assessments; • identifying surplus property and considering alternative use/disposal; • identifying cross-service opportunities where departments and/or external organisations can share accommodation; • reviewing data management arrangements; and • examining innovative options for service provision (e.g. hot desking, partnership arrangements, etc.). 4.5 Member Involvement A report was submitted to Development & Transport Select Committee – Property Portfolio Sub-Group in March 2001, outlining asset management issues. The Sub-Group noted that there was a need to identify Cabinet/Member responsibility for strategic asset management, and indicated that there is a strong feeling that elected members should be involved as far as possible. It is recommended that: •Asset management should be identified as a cabinet-level issue, and designated to the portfolio of the Cabinet member responsible for Development and Transport; •Area Committees should be used as a forum for consultation, where appropriate (e.g. around such issues as the development of customer service centres); and •Periodic reports to members on progress, key issues, performance management, etc. should be submitted to Cabinet by the Corporate Property Officer, via Capital Advisory Group. 5. Current Initiatives 5.1 There are a number of ongoing reviews and initiatives which may have an impact on the nature, function and location of the Council’s property assets, and which accord with the principals of good asset management. 5.2 Customer Service Strategy Under the umbrella of the Customer Service Strategy, area offices and 5
  6. 6. other local facilities are currently being reviewed/established with a view to rationalising buildings through a partnership working group from Cityworks, Community & Housing and Social Services. The scale and complexity of the asset management issues inherent in the Customer Service Strategy over the next five years may impact on other classes of asset, far beyond the initial consideration of existing customer service outlets. In the short term, each Area Committee has already been consulted on the criteria by which the location of primary Customer Service Centres will be determined. 5.3 Commercial Portfolio Review & Housing Shops Strategy Work has commenced on a review of the Council’s commercial property portfolio, aimed at challenging the need to retain holdings, and disposing of any that do not support corporate priorities or that cannot demonstrate an adequate return on investment. The Head of Finance should make explicit the financial parameters required in relation to the commercial estate. A separate review has also commenced in respect of the housing shops portfolio. Whilst the financial return from these holdings needs to be considered, this portfolio does have wider social objectives, and a link needs to be established with the Customer Service Strategy. 5.4 Going for Growth Going for Growth represents a radical citywide regeneration initiative that will have a significant impact on the City’s capital and asset management strategies. The revised draft East and West regeneration plans are to be released in June 2001, and are to be the subject of further public consultation. In addition, the process of selecting a development partner has commenced. 5.5 Community Buildings Community centres and other facilities operated by the Leisure Services Division of Cityworks are currently being reviewed together with the centres of the Children and Young People’s Service in Community & Housing. The same approach to political consultation as for Customer Service Centres will be employed. 5.6 Libraries The interim report of the Best Value Review of Libraries in 2000/01 identified that the role and location of the Central Library should be reviewed, and also that the branch library network should be rationalised. Preliminary work on the rationalisation exercise has begun. Libraries represent a core component of the Customer Service Strategy: those found to be appropriately situated with adequate facilities are likely 6
  7. 7. to discharge some secondary customer service centre functions at the very least. Opportunities will be sought to deliver as many Council services as possible (and appropriate) from the same facility. 5.7 Schools AMP & Housing Business Plan Education are separately engaged in producing their schools AMP in accordance with DfEE requirements – the AMP will form the key operational document for managing the schools estate. Housing will continue to produce a statement of their housing strategy for DETR under the HIP process. Operational management of the Council owned stock will be informed by the HRA Business Plan being developed in accordance with DETR guidance. The overarching Capital Strategy and AMP will need to make reference to these assets to ensure that the property and corporate capital implications of the assets held are fully considered. 5.8 Condition Surveys City Design has completed a programme of condition surveys for all public buildings as well as for the schools estate. An overall review of operational building assets will have to take into account refurbishment expenditure and the likely maintenance consequences of any rationalisation process. 5.9 Access Audits City Design will have completed this audit by July 2001. The study will inform the Council of the accessibility of all facilities that are used by the public. The study will categorise the City’s assets and the investment required to bring each facility up to a recognised standard as stipulated by the Disabilities Discrimination Act. 6. Key Issues 6.1 Whilst noting the work that is currently being undertaken in various areas, it is important to recognise that in order to fully develop appropriate processes, decisions and further actions are needed around the following issues: 6.2 Corporate/Business Process Assets should be regularly considered within relevant planning and management procedures: •asset management issues are to be incorporated in the specification being prepared for the service planning process •asset management issues are to be considered as part of all relevant best value reviews, and guidance will be issued to all review teams •the timetable for asset management planning is to be linked to those 7
  8. 8. established for other corporate/business processes 6.3 Data Management A review has taken place of existing data management systems to support corporate asset management. The review identifies the developments required to meet AMP requirements. In particular, the need to replace obsolete and manual systems, and for any developments to incorporate a Unique Property Reference Number to allow integration of data systems. 6.4 Consultation A mechanism should be established for consultation with internal stakeholders and users, particularly to establish views on the suitability of assets. 6.5 Other Agencies Consideration should be given as to how future partnership arrangements for service delivery, funding or shared resource provision might impact upon the performance of the Council’s asset base. 6.6 Property Management Existing property management arrangements should be reviewed – is the existing arrangement of devolving day to day management to service departments the most appropriate in terms of corporate asset management? 6.7 Office Accommodation Review A review of office accommodation should be initiated to examine running costs and how well space is being utilised, and to consider opportunities for innovative working practices (e.g. space planning, hot desking, teleworking, etc.) 6.8 Performance Measurement The DETR has recently issued revised guidance for the development of performance indicators to assist in providing standard information on asset management. The intention is to show year on year improvement within authorities and to allow benchmarking across authorities and the private sector. The DETR indicators should be adopted together with any other local indicators deemed appropriate. 7. Funding 7.1 Funding has been made available for condition and disabled access surveys for 2000/01, and an allocation for AMP preparation was approved by Cabinet in July 2000. It should be recognised that there is a need to establish an appropriate level of future funding for the ongoing work of asset management 8
  9. 9. planning. Estimates have been prepared for the next two years, as follows: 2001/02 2002/03 Disabled Access survey (one-off) £55k - Return in detail Disabled Access Survey - £62k (20% PA) Update/upgrade increase scope of building £270k £270k data (20% PA) Property Services – ongoing support of AMP £100k £100k planning & process Strategic Support – financial support of the £20k £20k AMP process Provision for data systems development £50k £10k £495k £462k 7.2 Funding remaining from within the Corporate Resource Pool for 2000/01 totals £94k – this leaves a funding requirement of £401k in 2001/02 and £462k in 2002/03. It is estimated that £70k of the asset management work relates to school premises and therefore will be funded from within the Education and Libraries budget. It is recommended that the balance should be found from within the Corporate Resource Pool and money already identified for the Disabled Access Officer. This budget will be monitored as part of the ongoing work of the Asset Management Working Group. 8. Views of the Head of Finance 8.1 The Head of Finance has been consulted. There are no other financial implications other than those identified in section 7 above. 9. Views of the Head of Legal Services 9.1 The Head of Legal Services has been consulted. There are no legal implications. 9
  10. 10. 10. Next Steps 10.1 The following action is now required: • Draft the Capital Strategy and AMP documents required for submission to Government Office – the documents to be presented to the next meeting of Cabinet; • Put in place the arrangements for the Corporate Property Officer, Capital Advisory Group, Asset Management Working Group and Member involvement, as set out in section 4 of this report; and • Establish a strategy and timetable to address the key issues set out in section 6 of this report. Contact Person – David Pringle Ext. 25524 May 2001 10

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